Raymond James Institutional Investors Conference March 6, 2018 Orlando, Florida

Transcription

1 Raymond James Institutional Investors Conference March 6, 2018 Orlando, Florida

2 Notices Forward-Looking Statements & Non-IFRS Financial Information All financial references are expressed in US$ unless otherwise noted. This presentation contains forward-looking statements and estimates. Such statements and estimates are based on assumptions as to the future and on management s current expectations and are, naturally, subject to risks and uncertainties. Actual company results could differ materially from a conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information can be found in the Company s annual information form, annual and quarterly MD&A, and on Norbord s website ( about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. During the course of this presentation, certain non-ifrs financial information will be presented. Definitions and reconciliation of terms can be found in the Company s annual and quarterly MD&A. 2

3 Company Overview Norbord Snapshot Leading manufacturer of wood-based panel products Largest global producer of Oriented Strand Board (OSB) Stated OSB capacity of 8.4 Bsf-3/8 Stated panel capacity (including particleboard & MDF) of 9.4 Bsf-3/8 Approximately 2,750 employees at 17 plants across the US, Canada and Europe Listed on the NYSE and TSX ( OSB ) Report in US dollars and in accordance with IFRS 2017 sales of $2.2 billion Panel Capacity by Region (1) North America Europe Oriented Strand Board (OSB) Particleboard Medium Density Fiberboard (MDF) Furniture (1) Based on estimated annual capacity at year-end

4 Industry Overview Global OSB Industry Industry OSB Capacity (MMsf-3/8 ) North America* Europe Asia South America * Excluding NA OSB siding capacity Norbord operates in the two significant global OSB producing regions Source: Company documents and other public filings, Wood Based Panels International (WBPI) 4

5 Industry Overview North American & European OSB Industries North American OSB Industry European OSB Industry * * Excluding OSB siding capacity. Norbord is a significant player in both key markets Source: Company documents and other public filings stated industry capacity 5

6 Industry Overview Substitution a Big Driver of OSB Demand Growth OSB Share of Structural Panels North America Europe Source: Forest Economic Advisors, LLC (FEA), European Panel Federation (EPF) and Norbord estimates 6

7 Industry Overview US Housing Recovery Continues US Housing Starts and Underlying Demand 1.5 mm Over-Built >6 mm Under-Built North American OSB Demand and Capacity Source: US Census Bureau and Forest Economic Advisors, LLC (FEA) Favourable long-term OSB industry fundamentals 7

8 Industry Overview North American Capacity Restarts Needed to Meet Growing Demand (in Bsf-3/8 ) Production Restarts/Idled New 1.2 =27% =14% North American OSB Installed Capacity: 37 Mills in Operation 7 Mills (Re)started in 2012/13 4 Mills Available for Restart (1) 2 Greenfield Mills in Development Norbord Mill (1) Norbord s Huguley, AL mill resumed production in October 2017 Note: Excludes OSB siding production and capacity. Source: APA, company documents and other public filings 8

9 Annual Average NC Price US$ per Msf 7/16" Industry Overview Attractive North American OSB Price Outlook OSB prices are tied to demand for building products, which is influenced by the general economy, demographics and the need for housing North Central Benchmark OSB Price $400 Historical Price Forecasted Price (FEA) $350 $300 $ year average: $243 $200 $150 $ F 2019F Source: Random Lengths and Forest Economic Advisors, LLC (FEA); As of January 29,

10 Business Strategy Focused Customer Strategy Sets Norbord Apart New housing sales volume growing as US housing starts recover Industrial and export sales at more stable margins 2017 North American Shipments 6.1 Bsf-3/8 10

11 Business Strategy Significant OSB Substitution Opportunity in Industrial End Uses 2015 North American Industrial Panel Consumption Norbord is a leading supplier to current industrial end uses MDF EWP Commercial Roofing Particleboard HW Plywood Furniture Engineered Packaging SW Plywood 17% OSB Source: APA The Engineered Wood Association, RISI, US Forest Products Annual Market Review and Prospects (USDA FS) and US International Trade Commission 11

12 Business Strategy Diversification From European & Asian End Market Exposure Strong North American footprint 2017 Sales by Origin Stable margin operations: Europe Asia-focused exports (1) (1) Provides greater diversification than North American-based competitors $2.2 billion sales Better positioned to weather market cycles (1) Exports to Asia are handled by Interex and sales are reported in the North American geographic segment. 12

13 Business Strategy Stable Results from European Operations Norbord s European operations provide greater sales and earnings diversification than other North American-based competitors European Adjusted EBITDA (US$ millions) 13

14 Business Strategy Inverness: Expansion Completed to Meet Growing European Demand Capex: $135 million Capacity: 720 MMsf-3/8 (640 km 3 ) Produced first board in September 2017 Started production in October 2017 Increased stated annual capacity by 325 MMsf (3/8-inch basis) 14

15 Financial Overview Strong Operating Cash Flow Through The Cycle Total Adjusted EBITDA (US$ millions) Norbord Combined Ainsworth (1) Norbord (excluding Ainsworth) Norbord Sensitivity to realized North American OSB Price Changes: +$10/Msf 7/16 = +$50 million Adjusted EBITDA (2) year average: $302 million North Central Benchmark OSB Price US Housing Starts (000s) $369 $320 $217 $161 $172 $163 $219 $186 $271 $315 $218 $209 $269 $353 1,956 2,068 1,801 1, ,003 1,112 1,174 1,202 (1) As disclosed in Ainsworth s historical MD&As; converted to USD using annual average exchange rate. (2) Assumes operation at LTM production levels as of December 31,

16 Financial Overview Disciplined Capital Allocation Three main priorities: Re-invest in the business Optimize capital structure Return cash to shareholders 2017 capex of $253 million: $108 million regular capex $37 million for Huguley restart $101 million for Inverness project $7 million capitalized interest 2018 capex budget of $175 million Capex Investment (US$ millions) Minimum Maintenance $25 million Inverness, Scotland expansion - $135 million over two years (1) (1) 2015 onwards reflects Norbord following completion of merger with Ainsworth. Pre 2015 reflects Norbord excluding Ainsworth. 16

17 Financial Overview Top Quartile ROCE Among Peers Over Cycle 80% 15 Year Average ROCE % (Peak/Mean/Trough) (1) 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% Norbord Peer1 Peer2 Peer3 Peer4 Peer5 Peer6 Peer7 Peer8 Peer9 (1) Return on capital employed (ROCE) is a measure of financial performance focusing on cash generation and the effective use of capital. ROCE is calculated as Adjusted EBITDA divided by average capital employed (operating working capital, PP&E, goodwill, intangibles, timberlands & licences). Source: Capital IQ 17

18 Norbord Inc. Suite 600 One Toronto Street Toronto, Ontario, M5C 2W4 Canada Tel: